Polkadot is a blockchain platform that supports a native cryptocurrency and various other independent cryptocurrencies and blockchain projects. Let’s delve into each of these components of the Polkadot network:
Polkadot (DOT) Token
The DOT token is used to facilitate governance on the Polkadot network. It is also utilized in staking (securing digital loans) and para-chain, which is a method for blockchain interaction.
Other Cryptocurrencies
In addition to DOT, the Polkadot platform hosts several other cryptocurrencies. Among the other tokens hosted on Polkadot are Chainlink, Kusama, Compound, Ankr, and 0x, with over 100 tokens operating across the Polkadot network.
Blockchain Projects
Polkadot supports a variety of projects, including those focused on decentralized finance (DeFi), non-fungible tokens (NFTs), smart contracts, the Internet of Things, and gaming.
Note:
The Polkadot blockchain is open source, which means that anyone in the Polkadot community can view and contribute to the platform’s code.
You can think of Polkadot as a blockchain of blockchains, and this feature is what sets Polkadot apart from other blockchain networks. The Polkadot platform “connects the dots” by linking blockchains together.
Polkadot can facilitate the transfer of any type of data across any type of blockchain. The Polkadot blockchain supports a multi-chain application environment that allows communication with other blockchains like the Bitcoin network. Polkadot’s ability to transfer data, even between public and private blockchains, creates numerous possibilities for innovative applications.
Polkadot:
Founded in 2020
Circulating supply as of January 16, 2022: 1,103,303,471 / No supply limits
Special Feature: Enables interoperability between blockchains
The Polkadot blockchain uses a consensus mechanism known as “nominated proof-of-stake” (NPoS). This mechanism allows members of the Polkadot community who stake – agree not to trade or sell – their DOT tokens to nominate other community members to help them operate the Polkadot blockchain.
The Polkadot community comprises several types of participants who play different roles in operating the blockchain. These are the four main roles:
Nominators
Nominators are DOT token holders who stake their tokens and participate in the voting process to select new validators.
Validators
Validators on the Polkadot network process and record transactions to add new blocks to the Polkadot chain.
Collators
These community members gather transactions from other sources and aggregate them to be processed by validators.
Fishermen
Those who monitor the network for malicious behavior.
Polkadot supports parallel processing of many transactions across its blockchain. The Polkadot blockchain can execute parallel processing because it utilizes a combination of these four technologies:
Relay Chain
The relay chain is the core blockchain of Polkadot, used to facilitate operations between blockchains and maintain security across the network.
Parachains
Parachains are semi-independent blockchains that can host their own tokens and operate using their own functions and rules.
Parathreads
Parathreads are also semi-independent. They are used for applications that require fewer resources and do not need continuous connection to the Polkadot network.
Bridges
Bridges are the connection between networked blockchains and other blockchain networks like Ethereum.
You can invest in Polkadot by purchasing its native token, DOT. Here’s how to buy and store DOT:
Choose a Cryptocurrency Exchange
You can buy Polkadot using one of the many cryptocurrency exchanges. Your options include Binance, Coinbase, Kraken, and others. Pay attention to the fees imposed by each exchange, as each one charges fees differently.
Place a Buy Order
Decide
Enter the amount of DOT you wish to purchase, and execute a buy order through the exchange. You can use the exchange’s website or mobile app to enter your order preferences.
Check again that you have entered the purchase correctly – then press the buy button. Using the Kraken exchange, for instance, your purchase of Polkadot should complete within two minutes.
Secure Your DOT Currency
Any of the major cryptocurrency exchanges can store your digital coins for you. You also have the option to transfer your DOT currency to your own software or hardware wallet. Polkadot is compatible with some of the best hardware and software wallets currently available on the market.
Note:
Cryptocurrencies like DOT are subject to extreme volatility and are considered highly risky investments.
The Polkadot network was launched with its first block, known as the genesis block, on May 26, 2020. The network adopted a nominated proof of stake mechanism in less than a month, on June 18, 2020.
While the Polkadot blockchain was originally launched and controlled by the Web3 Foundation, the blockchain development organization transitioned in July 2020 to shift full control of the Polkadot network to DOT token holders. The DOT currency was re-tokenized on August 21, 2020, replacing each existing DOT coin with 100 new DOT coins.
Disclaimer:
The Polkadot network does not provide tax, investment, or financial services nor does it offer advice. The information is provided without regard to the investment objectives, risk tolerance, or financial circumstances of any specific investor and may not be suitable for all investors. Past performance is not indicative of future results. Investing involves risks including loss of capital.
Source: https://www.thebalancemoney.com/polkadot-explained-5216191
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